What’s Better Than Student Loan Forgiveness?

Aug 31, 2022 | Macro Insights, No Bull Economics

Executive Summary: Our favorite Uncle Sam announced that he will “forgive” $10k or $20k of student debt (depending on the type of loan) for those now making under $125k/year. Is this a one-time deal, or will this happen every year? We need to know whether to go out & borrow some more for college. Some adults should ask if this is going to lead to even greater student loan indebtedness beyond the $1.7 trillion currently outstanding. Another good question: why not use the huge college endowments to fund this debt forgiveness? What is the purpose for these endowments anyhow??

Well, at least it looks like a break for broke college grads at first glance! But you know what would be even better? That would be Uncle Sam figuring out how to make college affordable so that students wouldn’t have to go into debt in the first place!

Way back in 1972, 4 years of public college cost $5,600 or $11,720 for private. Currently, it costs $91k for public education and $207k for a private school. Now that’s some inflation! How is that normal??

In any case, the goal should not be to encourage students to pay up for overly inflated college costs and then forgive part of their debt one day in the future. A more sensible solution is to figure out how to make the cost of 4 years of college affordable. Perhaps a good place to start is by looking at whether college could be completed in 2 – 3 years by eliminating the requirement that students repeat their high school curriculum. The goal should be to move young adults into the workforce faster, benefitting both students & the economy alike.

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